Foolhardy it may be to go out on a limb here to take on my boss (in this carnation I mean my editor, Larry Dignan) and a force of nature that is my fellow ZDNET blogger Dennis Howlett but I have to disagree with both on the subject of viability of the green market. Dennis thinks green is a fashion not to follow, fools gold maybe and Larry came away from Oracle Open World thinking that, with green, Silicon Valley is attempting to manufacture the next big thing. And yet, despite the sharp economic downturn, the market is doggedly sticking with the green agenda. In an Economist Intelligence Unit survey just out (part sponsored by SAP, see my disclosure) 73% of companies surveyed expect energy efficiency to be an important part of the strategic agenda in the next two years, especially as they seek to take cost and greenhouse gases out of the business. And it's not all just cost cutting and shrink wrapping dressed up as green. It's become an important stimulus for innovation and business model and process transformation with 40% of the respondents reporting they have developed new products and services that also help improve environmental performance.
But back to Silicon Valley and the green to gold argument. Well Mr. Green to Gold himself, Dan Esty, appeared at Oracle Open World to preside over the Green Enterprise Awards. OOW was badged as green event with executives even donning bicycle generators to power the event and not a water bottle in site though hopefully the deodorant cans were spared from the green surge. Sadly, such displays too often fuel the skeptics & it was the experience of OOW that prompted Larry's video. Even the San Francisco Chronicle blog and its commenter's were a bit sniffy in chalking it all up as a gesture. In fact, gestures are hugely important in the tricky relationship between business and society & never more so than today. (Just ask former RBS CEO Fred Goodwin who this week is under pressure from the British government to hand back his pension as a 'gesture'. In his letter to the minister in charge just published he uses the word gesture five times no less.) Oracle is not alone in gesturing green at events, SAP virtualized three of them last year with 22,000 remote attendees. And if all these gestures achieve is to get customers and employees thinking about the role of technology enabling sustainability then that alone is surely a good enough objective. Besides the environmental benefit, It's a win win for the customer and the vendor if the gestures lead either towards green innovation. Hugh McLeod understands the power of such gestures:
How do you turn a product into a social object? Answer: Social Gestures. And lots of them.
Still there is this dogged problem of the 'green wash' trap and 79% of the EIU respondents agree its perceived as a real problem. On the other hand there are expectations that the technology sector has a responsibility to lead from the front and educate their customers on sustainability. Gartner & WWF, for example, released a scathing report on the failure of the industry to do just that. Damned if you green gesture and damned if you don't. Green leadership or green wash? And this is where my main point of disagreement with Larry lies. The truth of the matter is that Silicon Valley certainly didn't invent sustainability just yesterday to manufacture a market, rather, its racing to catch it up. For instance, here in Europe Shell has been reporting its sustainability performance since 1997 and last week we celebrated the 15th anniversary of the most excellent Cambridge University Business & Environment Programme, a celebrated venue where arguably Wal Mart learned a trick or two over the years.
In contrast, Silicon Valley (Intel a notable exception) and especially the software vendors are arriving now quite late to the game (witness the rash of sustainability report out late last year from Symantec, Autodesk, SAP, Oracle). Late, and yet also possibly right on cue. Why do I say this? Because the game has changed and suddenly got more serious due to an economy that forces a reality check and a regulatory environment that is bringing the external cost of greenhouse gas internal and fast. Whether it's health and safety or CO2, businesses have come to the conclusion that sustainability is a serious strategic consideration that can't be patched together by isolated initiatives and marketing spin. They are looking for a deeper level of integration and performance at the business process level and expect IT vendors to provide the tools to enable this.
Like never before sustainability has found its legs in the market - the US will likely take its lead from the EU and have a green house gas cap and trading scheme in operation by 2012. While Sumi and Larry find it hard to find a recycling bin in DC for more than two years some of the largest corporations in the US, organised as US Climate Action Partnership, have openly lobbied the Hill to enact climate legislation so to give the market some greater certainty on the future cost of carbon. The Obama green stimulus packages for the electric grid and energy efficiency are also having a potent effect on shaping the market for sustainability. The role technology will play is critical and it isn't all about geekery in the data centre. According to the NGO The Climate Group's SMART 2020 report, researched by McKinsey, the ICT sector is responsible for 2% of global emissions but it is capable of enabling a 15% reduction of total global emissions through efficiencies by 2020. That is a significant business opportunity.
During the first wave of corporate sustainability dominated by the extractives and high impact industries, the talk was mostly of setting the rules for business engagement in society and the corporation's social responsibilities. Software companies showing up for this conversation would most likely have been met with blank stares. But as we move from talk to enabling transformation we will see the tech industry take the lead in the second wave. This is what stakeholder groups from NGOs, to government, customers and even employees are demanding of the industry right now. For sustainability 2.0 enablement is the material responsibility of the tech industry.
Back to gestures - at OOW it wasn't all just that, gestures. Oracle announced its partnership with ESS. I spoke recently with ESS CMO KC Chartrand about the deal and his insight pretty much lines up the EIU survey. He also told me that Oracle's own internal survey of their customers was showing some fatigue with niche point solutions for sustainability compliance and were looking for cross enterprise solutions. It wasn't clear however, when the Oracle and ESS partnership would bear fruit with solutions in the market but the direction is there.
So for the years ahead, gesture and solutions are going to sit uneasily together. The likes of WWF will point to anomalies such as Oracle having set itself a CO2 target for reduction but not yet carried out a CO2 inventory and publicly reported it. Likewise they will point to SAP for having inventoried and publicly reported its carbon without having set a target for reduction. They will wonder why Oracle, just two weeks after the green glory of OOW, releases a sustainability report that announces an intention to drop the environmental quality process standard ISO14001.
No doubt the market will iron out these creases with tech vendors in future competing not only on product but also for leadership in their own operational performance and of course, on gesture. Green will still be gold and sustainability wins.